Crucial Data Due on Earnings, Inflation
Despite Wall Street’s expectations of yet another round of impressive quarterly earnings, this week’s onslaught of data could leave the market back where it started -- or ultimately lower.
First-quarter earnings season kicks into full swing today, and several key economic reports -- including two inflation assessments -- are due from the government.
Companies are once again expected to post double-digit profit growth for the first three months of the year. However, some analysts fear this may be the last solid quarter for a while as the effects of rising interest rates and energy costs are felt.
Market pros are wondering how much higher the Federal Reserve will lift interest rates as it continues to battle inflation. Disappointing reports on wholesale and consumer inflation would probably send investors running for cover. On the other hand, stabilizing prices could energize the market after its recent decline.
Without much news last week to give investors confidence, the lingering uncertainty over earnings and the economy’s health left stocks drifting. The Dow gained 0.16%, the S&P; 500 lost 0.49% and the Nasdaq slipped 0.55% in a shortened week.
The Commerce Department on Tuesday reports data on housing starts and building permits issued in March. Economists are expecting housing starts to retreat by 75,000 to 2.05 million and permits to fall by 99,000 to 2.08 million -- a sign that the housing market is slowing amid higher mortgage rates.
Also Tuesday, the Labor Department releases its monthly producer price index. The PPI is forecast to edge up 0.4% after tumbling 1.4% in February; core PPI, which excludes food and energy, is seen rising 0.2% after adding 0.3% in the prior month.
The department’s reading of its consumer price index on Wednesday is expected to show a gain of 0.4%, up from a slight 0.1% rise in March. Core CPI is seen adding 0.1%.
Nearly half the Dow industrials report their results this week. Analysts have said the lack of profit warnings means results stand to match or beat Wall Street’s lofty expectations.
Tech investors will be closely watching Tuesday’s results from Yahoo Inc. to gauge the health of online advertising. Analysts predict its profit will drop to 11 cents a share from 13 cents a year earlier. Yahoo is trading 29% below its 52-week high of $43.66 in early January, finishing Thursday at $31.13, up 3 cents.
Shipping firm UPS Inc. could come into focus as investors watch for signs of soaring oil prices eating into profit. UPS shares rose 14 cents to $81.60 on Thursday, up 9% so far this year. The company reports Thursday morning; its earnings are seen jumping to 88 cents a share from 78 cents last year.
On Tuesday, the Fed publishes the minutes from the latest Federal Open Market Committee meeting. Analysts will be scouring them for clues to whether an end to interest rate increases is near.
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The Week Ahead
Today
* Quarterly earnings reports expected from Charles Schwab Corp., Citigroup Inc., Knight Ridder Inc. and Wachovia Corp.
Tuesday
* Labor Department reports producer price index for March, Commerce Department reports on housing starts for March and Federal Reserve releases minutes of March 28 meeting.
* Quarterly earnings reports expected from Allstate Corp., Amgen Inc., Boston Scientific Corp., Dow Jones & Co., Merrill Lynch & Co., IBM Corp., Johnson & Johnson, Mattel Inc., Texas Instruments Inc., U.S. Bancorp, Washington Mutual Inc., Wells Fargo & Co. and Yahoo Inc.
Wednesday
* Labor Department reports consumer price index for March.
* Quarterly earnings reports expected from Apple Computer Inc., Coca-Cola Co., Cingular Wireless, Pfizer Inc., EBay Inc., General Dynamics Corp., Intel Corp. and Kraft Foods Inc.
Thursday
* Labor Department reports on weekly jobless claims. Freddie Mac, the mortgage company, reports on mortgage rates.
* Conference Board reports its monthly leading economic indicators index.
* Quarterly earnings reports expected from Altria Group Inc., Bank of America Corp., United Parcel Service Inc., Southwest Airlines Co., General Motors Corp., Google Inc., Merck & Co. and Union Pacific Corp.
Friday
* Quarterly earnings reports expected from 3M Co., Ford Motor Co., Halliburton Co., McDonald’s Corp. and Wyeth.
